The present invention relates to processing business transactions, and, more particularly, to a method and system for providing a single transaction point to process business transactions between multiple trading partners.
When one company, a purchaser, desires to buy products from another company, a supplier, an order is traditionally transmitted by the buying company to the selling company via a purchase order. The purchase order may be for a single product or for more than one product. If more than one product has been ordered, generally the purchase order will have a line item entry for each separate product. Often, a particular individual associated with the buying company, typically designated a “buyer,” is responsible for each particular purchase order. A company may have one or more such buyers.
The selling company then fills the order and sends the product(s) to the buying company. The buying company generally notes the quantity of product received on the purchase order, creating a receipt document. After the selling company has shipped the product(s) to the buying company, the selling company generates and sends to the buying company an invoice for payment for the product(s). Usually, the invoice will have line item entries corresponding to those line item entries on the purchase order and receipt document. Sometimes the invoice will have line item entries corresponding to the line items on more than one purchase order or receipt document. This invoice corresponds to a receivable asset of the selling company associated with the amount due from the buying company.
The selling companies may also sell the receivable associated with the invoice to a third party, such as a bank or other receivables factoring party, based on a discount from the receivable amount. This allows the selling company to receive the cash before the invoice is paid to better manage the cash flow. This also shifts the risk to the third party that the buying company will timely pay the invoice and will have no disputes with the invoice information. This is known as factoring.
The current infrastructure in both traditional and internet business-to-business transactions is highly fragmented with buying companies and selling companies each dealing with hundreds or thousands of parties, purchase orders, invoices, and receipt documents. A selling company's billing data is a component of a buying company's accounts payable data. A buying company's remittance data is a component of a selling company's accounts receivable data. Further, a company may be a buying company for some products and a selling company for other products.
For each buying company, there are many selling companies with which it is a trading partner. For each selling company, there are many buying companies with which it is a trading partner. The buying companies and the selling companies must each track their accounts payable and accounts receivable information for each of the companies with which they do business. This can be illustrated as in FIG. 1, representing the traditional interactions between businesses.
Thousands of companies each perform billing, invoice matching, and reconciliation activities independently and redundantly, despite the fact that they are all using the same source data, namely, the data from the purchase orders and corresponding invoices and receipt documents. The results of these activities are then shared between these companies via remittances, short pays, claims, etc. This business process can create unnecessary administrative confusion and expense.
Electronic billing, remittance, payment, and tracking technologies have generated limited savings because they have left the reconciliation environment within each individual company. Also, web-based billing and payment solutions have achieved some success in moving information between companies, but have required companies to maintain their own internal accounts payable and accounts receivable functions which may require a significant commitment of resources.
There are existing systems that coordinate customer billings and receipts for a single selling company. However, such a system generally does not allow for the buying companies that are customers of that selling company to access the financial information that is related to the buying company's account. Likewise, such systems generally do not coordinate the supplier billings and receipts for the buying company for suppliers other than that selling company. In short, the systems are selling company-based.
Other systems provide only electronic presentation of invoices to buying companies, requiring manual approvals, payments, and resolution of any discrepancies. Also, those systems require manual matching of the presented invoices with the corresponding purchase orders and receipt documents. These reconciliations are not done automatically. One such system is operated by Miradiant.
There is a need for a single transaction platform that can process transactions on both sides between trading partners based on a single set of data. There is also a need for a one-source aggregation of the accounting data from multiple trading partners to more efficiently process transactions between them.
The processing of purchase orders and invoices and the associated discrepancy resolution is a costly, but largely neglected, problem to all industries. There is a need for a system that will address these redundancies in the discrepancy resolution process and reduce the unnecessary administrative infrastructure associated with the processing of invoices and purchase orders between individual trading partners or between multiple trading partners.